# Homebuilder Sentiment Running High Despite Production Bottlenecks

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Last modified: 2021-06-09

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By Paul Ebeling · 2021-06-09
Tags: Shayne Heffernan on Investments, Real Estate, sentiment, bac, Paul Ebeling, homebuilder, homebuillding, homebuild
Signed: no (published before platform launch).
Nothing in this article is investment advice.

#homebuillding

[$BAC](https://finance.yahoo.com/quote/BAC?p=BAC&.tsrc=fin-srch)

Homebuilder sentiment remains “*close to record highs given exceptionally low inventory,*” the Bank of America reports.

 The National Association of Home Builders housing index, a measure of homebuilder sentiment, peaked at a record high of 90 in November, though it currently sits a few points lower at 83.

This finding comes in the midst of significant cost pressures on builders, with a rise in lumber and related products’ prices having added *“over $34-K to the price of a new home over the past year.*” These cost increases are beginning to hold back the production of new homes, the report found.

Ultimately, the report finds more significant risks in the future of existing home sales. *“Looking ahead, we suspect the risks are for existing home sales to head lower due to the combination of declining affordability and tight inventories,”* the report says. *“Meanwhile, new home sales may grind higher as these supply challenges funnel demand towards new construction*"

Existing home sales have declined this year, while demand continues to be high. *“Mortgage purchase applications and existing home sales have been declining this year and we expect further slippage,”* the report noted. *“In contrast, we see upside for new home sales and housing starts but with speed bumps due to high costs.”*

Have a healthy day, Keep the Faith!

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